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Agriculture

Adani in the Eye of the Storm as Himachal Apple Prices Crash

Apple growers feel that instead of incentivising big corporates, the state government should instead help farmers build cold storages.

Chandigarh: The main argument of those rallying behind the Bharatiya Janata Party government’s controversial farm laws; that the free market economy will reward farmers, faces a major dent in the wake of the crashing market price of the apple crop in Himachal Pradesh. 

The Rs 5,000 crore apple business in the hilly state, which mostly runs on the free market model, was dealt a major setback right at the beginning of the season when the Adani group, a big corporate buyer in Himachal Pradesh’s apple market, announced its opening price for A-grade, premium quality apples at just Rs 72 per kg, much lower than the Rs 88 per kg it offered last year. 

This led to a disruption in the whole market, with apple growers slamming the corporate giant for the price crash and the consequent skewed income to the growers.  

Adani properties are already under siege in Punjab and Haryana due to protests by farmers who blame the big corporates – and their tendency to monopolise the agriculture market –  for the controversial farm laws. Now in Himachal, where trade is open, apple growers say Adani’s functioning is proving detrimental for them.

Also read: Protesting Farmers Celebrate a Win as Adani Facility Shuts Down in Ludhiana

Dimple Panjta, president of The Himalayan Society For Horticulture and Agriculture Development, a Rohru-based NGO consisting of a large number of apple growers, told The Wire that in 2011, Adani bought A-grade quality apples at Rs 65 per kg. A decade later, it is offering just Rs 7 more. 

“Is this what we really deserve,” asked Panjta. “While our farm inputs expenses have gone up manifold, the company brought in by the government to help farmers in getting good market rates is resorting to exploitation of farmers by continuously reducing procurement rates.”

According to him, a decade earlier, the cost of production for the growers, inclusive of packaging costs, was Rs 250 per box. Now it has gone up to Rs 600 per box. “But see the returns, it is [the] same [as] a decade earlier,” he added.

Panjta said the problem with the Adani group is that it carries a lot of weight in the apple market. Even though it buys no more than nine or ten lakh boxes every season (every box has 25 kg of apples) – which is not more than 3-4% of the state’s total apple production – Adani’s offer price somehow sets a benchmark for the rest of the market. This is what destabilises the rates.  

“Traders often say when Adani is buying at ‘X’ rate, why should they [the traders] pay more?” said Panjta.

He said, moreover, that Adani plays it smart with its offer rate. Its offer price is for the premium quality of the apple and pays quite less for medium and small size of apple. Further, if the apples are discoloured, the rates are far less than farmers’ production costs. Now that It has fixed the rate of Rs 72 per kg for A-grade apple, the average earning of an apple grower, if they supply to Adani, will not be more than Rs 50 per kg. 

“On the other hand, there is clear evidence that apples procured by the company at a cheap rate from the farmers are sold in the retail market for Rs 250-300 per kg in off season. But farmers don’t have the luxury to hold back the produce and wait for the day when the rates go up in the retail market. We are under compulsion to sell our crop soon after the harvesting,” he added

“From reliable sources, our NGO has come to know that the Adani group, which was given land at a token price to set up three cold storage centres in Rampur, Rohru and Sainj in Shimla District, is violating land lease rules. Under the rules, they must leave 25% [of the] space in their cold stores for the Himachal growers, which we firmly believe is not [being] complied with.  We have written a letter to the chief minister to inquire about it and make the findings public,” he said.

‘What was the use of providing subsidised land to Adani?’

Lokinder Bisht, president of the Progressive Growers Association, told The Wire that Adani was given the land to set up its cold stores at subsidised rates, but he questioned what good it did for the growers ultimately.  

He said that before Adani announced its rate, the premium A-grade apple was being sold for Rs 80-90 per kg, at over Rs 2,000 per box. But the price crashed soon after Adani’s Rs 72 per kg announcement. 

“Keep aside its commitment towards [the] welfare of Himachal’s apple industry in lieu of subsidised government land, where is the company’s corporate social responsibility anyway? They should ideally announce rates more than the prevailing market rates but for them, their profit is supreme [to] the growers interests,” he said.  

Adani’s Rs 72 per kg rates are for big apples with 100% colour. For small and medium apples, their rate is less than Rs 60 per kg. At their rates, produce of less than 60% colour is sold between Rs 12-15 per kg, whereas farmers’ cost of production is more than Rs 25-30 per kg. 

“In any apple orchard, premium quality apples are only one third of the whole production. This means that we are earning very less for [the] remaining produce,” Bisht said. 

Bisht said, instead of incentivising big corporates, the state government should instead give incentives to growers to set up small-volume cold stores so that they can control the supply chain whenever there is a glut in the market and the prices crash, saving growers from heavy losses.

The majority of the other apple growing societies have also expressed similar disappointments. 

Harish Chauhan, president of the Apple, Vegetable and Flower Growers’ Association, said that when big corporate companies deliberately create a price slump in the market, what options do small and marginal growers have? They don’t have the capacity to hold back their produce. So they are forced to sell at whatever rates the market forces decide. 

“[The] majority of the apple producers in Himachal Pradesh are not large farmers and every year, they are vulnerable to market forces, with little help [coming] from the government to intervene in price stabilisation,” he said.  

Manjeet Shilu, plant head of the Adani Controlled Atmosphere (CA) store in Bithal, refused to talk to The Wire when contacted.

Adani’s Controlled Atmosphere Facility in Himachal Pradesh. Source: Youtube

However, in his statement in the Tribune on August 24, he claimed that the prices offered by the company were good, especially considering the fact that growers do not have to pay for packing and grading.

“We have a pool of around 17,000 growers who give us apples. We hold discussions with them before fixing the prices to get a sense of what they are expecting,” said Shilu. “And since we have announced the prices, we have not received even a single call from farmers to complain about the rates. Only those growers are complaining who never give apples to Adani stores,” he said.

Meanwhile, Pankaj Mishra, Adani Agri Fresh’s terminal head in Himachal Pradesh told The Wire that Adani’s rates are always market driven and even 15-20% higher than those offered in mandis. 

“I don’t want to comment [on] why some growers are condemning the rates. Our rate is always market driven,” he said.  

Congress calls it open loot, government body blames it on low quality produce 

Addressing a media conference in Shimla on Wednesday, Congress state president Kuldeep Rathore accused the Adani group of fleecing apple growers and asked the BJP state government to protect growers from this open loot by the corporate giant.

Rathore said that this year, the Adani group has reduced the purchase price of apples by Rs 16 and influenced the Rs 5,000 crore market of the state. The decision has compounded the miseries of the apple growers after COVID-19 and unexpected snowfall in May had broken the backbone of the small farmers of the state. 

He alleged that the apple prices had been reduced with the tacit approval of the government. 

Since 1984, successive state governments have been giving subsidies on insecticides, fungicides and other medicines, along with agricultural equipment but the BJP government has discontinued all these benefits, Rathore added.

However, when contacted, Naresh Thakur, Managing Director of the HP Agriculture Produce Marketing Committee (APMC) denied that Adani’s rate has led to the market crash. 

Also read: The Pandora’s Box of Agri Reform, Subsidies and Tariffs

Thakur said that quality produce is still getting good market prices but the problem this season is that there are a lot of quality issues with the majority of apple produce because the weather was very uncertain during the growing period. Due to this, the colour of the apple is not good and the size is very small. Apart from that, the produce is partially damaged too, as a result of hailstorms. 

Thakur also noted that, this year the apple production has been very high, almost two-and-a-half times higher than last year. In 2020, the total apple production in the state was close to one and a half crore boxes but this time it is expected to cross three crore.

Thakur added, “Therefore, several reasons are responsible for low apple prices in Himachal this year. To say that Adani crashed the price is wrong. It is the market price that Adani has offered. If Adani is buying at less price and the market is offering more price then nobody will sell it to them. Ultimately it is the demand and supply that set the price.”  

Thakur said that, if one checks last year’s trend, the price remains sluggish when the apple market opens up after harvesting in Himachal. The price picks up during the festival season when the demand for the apples goes up in the retail market. 

According to Rajesh Dhanda, general secretary of the Himalayan Apple Growers Society, however, apple growers don’t have the capacity to hold back the produce and wait for the price to rise further due to insufficient cold storage infrastructure. 

There are very few government-run cold stores in Himachal right now and they are often packed to full capacity. This forces apple growers to sell their produce soon after the harvest, Dhanda told The Wire

If the government wants to help growers increase their incomes, they must set up at least one cold store with the capacity of 2,000-3,000 metric tons in every belt where a minimum of 5 lakh boxes are produced.

“If the state can give subsid[ies] to Adani to set up cold storages, why it can’t give subsidised land to the apple growers by making their cooperative societies and [letting] them build storage houses on their own investment,” Dhanda added.

He said the state never thinks twice before allocating land for hydro projects, universities and even Baba Ram Dev’s society but welfare of apple growers is hardly ever on the government’s agenda. 

“Our major demand from the state government is that it must bring favourable policies that promote cooperative culture [rather] than the corporate monopoly,” he added.

‘Farm laws to create imperfect market conditions’: New research paper 

Meanwhile, a new research paper written by farm economist Sucha Singh claims that the new farm laws will provide predisposing conditions for imperfect markets which will be exploitative, fatal and disastrous for Indian farmers. 

It stated that the setting up of the parallel private markets will attract buyers of agricultural produce who can legally avoid local taxes. This will make APMC markets (government mandis), where farmers effectively realise Minimum Support Prices (MSP) redundant after a few years. In the absence of APMC markets, private players will dictate the prices to the disadvantage of the farmers.

Even the current MSP policy is guided by national politics and international geopolitics and fails to ensure remunerative prices to the farmers. MSPs fall short of farmers’ expectations and are much lower than prices arrived at by using the formula recommended by the Swaminathan Commission. Already MSPs are inadequate  – effectively available to 6% of farmers – and are confined to wheat and paddy and only partially to cotton.

As per the paper, the case of Bihar is important where the APMC Act was abolished in 2006. At the time of repealing this act, it was claimed that it would lead to massive investment in private markets with modern infrastructure and that the state would become a hub for agro-processing, enabling farmers to compete at global level. But no modern private market emerged and agro-processing did not pick up at all. 

An analysis of procurement prices for the years 2016-2017 and 2019-2020 shows that the prices farmers got from private traders for wheat, paddy and maize were Rs 350–450 per quintal lower than the MSP. 

The paper recommends that if the government of India is genuinely interested in the promotion of farmers’ welfare, cooperative farming needs to be promoted more than corporate farming, something that the apple growers of the Himachal are demanding as well.